Port union voices unanimous support for strike, escalating U.S. supply chain fears

After two days of meetings of North America's largest longshoremen's union amid an impasse with port ownership on a new contract, concerns of a strike are growing amongst those in the business and logistics community.

A strike by the International Longshoremen's Association, which moves the trade at the ports along the East Coast, Gulf Coast and Puerto Rico, would impact 43% of all U.S. imports and billions of dollars in trade monthly.

At the conclusion of a two-day meeting of the union's wage committee on Thursday, 5 Sep, union members voiced unanimous support for a strike on Oct. 1 if a new contract meeting its demands doesn't materialize. Harold Daggett, president of the ILA and the union's chief negotiator, has said he wants a good economic deal for his members, which includes union opposition to port automation and exclusive port contracts.

In a video featuring Daggett played before the energized crowd, he said bargaining in good faith is the only way to get an agreement and threatened a worker slowdown if the Biden administration forces the union workers back to the docks using the Taft-Hartley Act.

A worker slowdown was employed during recent labor strife involving ILWU negotiations covering West Coast ports, where vessels were not worked on expeditiously, creating backlogs of container pickups for trucking and rail. There has been a wave of union actions in recent years impacting ports, rails, and the global supply chain, from Europe to the West Coast and Canada's rail strike, the most recent action, last month.

Governments have used national law to force union workers back on the job in recent years, from the Canadian rail strike to the freight rail strike in the U.S. in 2022.

The Biden administration told CNBC this week it supports collective bargaining as the best way for American workers and employers to come to an agreement. "We've never invoked Taft-Hartley to break a strike and are not considering doing so now," an administration official said.

Since its enactment, presidents have intervened in labor disputes under Taft-Hartley on 37 occasions.

A recent analysis of potential ILA strike impact shared with CNBC by the U.S. Chamber of Commerce — and prepared by Mitre Corporation, which operates federally funded research and development centers on behalf of government, industry and academia — noted that although no coastwide disruption has occurred since 1977, "opposition to increased port automation and demands for higher wages are major issues in the current negotiations."

The Mitre analysis estimates that a 30-day strike centered at the ports of New York and New Jersey could result in economic impact as high as $641 million per day. In Virginia, an economic impact of $600 million per day is forecast, or roughly $18 billion over 30 days. Export impacts at Houston operations could reach $51 million per day, and $41.5 million per day for imports.

NRF President and CEO Matthew Shay says the threat of a strike during the peak shipping season has many retailers already implementing costly mitigation strategies. "At a time when inflation is on the downward trend, a strike or other disruption would significantly impact retailers, consumers and the economy," said Shay. "The administration needs to offer any and all support to get the parties back to the table to negotiate a new contract."